Selling your business?: Engage Guide to Wealth Management…
Part 3: Investment & Diversification.
The growth engine to help maintain purchasing power.
Ultimately, once you’ve sold your business, the perfect situation would be that your investments provide these three things:
The flexibility to choose what you want to do next.
The optionality to decide what that timeframe looks like.
The possibility to love your next chapter as much as you loved your first business.
Life after your business has so much to offer that it doesn’t need to be feared.
In the simplest form, this is the perfect outcome when investing. You turn your future unknowns (an inevitable part of being an entrepreneur) into something you can control.
We like assets that provide rising costs against inflation and are income-producing. We also like assets that have CONSISTENTLY worked, not just what is working now.
Consider your investments in three buckets
Cash This is low risk but provides certainty and instant accessibility.
Growth assets The investments that will build long-term wealth. Assets with a long history of inflation-proof growth, e.g.,
• Stocks
• Property
Other These are more speculative investments that are potentially great but also very high risk, e.g.,
• Private Equity
• Venture Capital
• Lending / Bridging Finance
• Business Ventures
Simply put, your core portfolio consists of buckets 1 and 2. You need enough there that can sustain your lifestyle forever before diving into bucket 3.
Wealth management is about approaching investing like this:
What is a good (if not great) rate of return we can sustain for the longest possible period in time?
To win the game of investing, you just need to stay in the game long enough.
After all, time is your greatest superpower.
Compounding is funny, it is hard to see until it is impossible to ignore.
8 + 8 + 8 + 8 + 8 + 8 + 8 = 56
8 x 8 x 8 x 8 x 8 x 8 x 8 = 2,097,152
Counter Intuitive Thinking
Passive investing can be a tricky mindset for entrepreneurs. They are often very process driven and their decisions influence their companies’ outcomes. So, when we say doing nothing is the best way to invest, it’s counterintuitive.
The way to get round this is by using the wealth of data that supports passive investing and behavioural science. Here, we bring it back to what entrepreneurs do know: using data to inform decisions.
Evidence-based investing is something we believe in, and coach our clients through.